By: Suzanne Shaffer
A college education is a big investment. According to a recent survey, the average cost of college in the United States is $35,331 per student per year.
This
price tag has more than doubled over the past 20 years. The average
cost of an in-state public four-year institution is $25,487 per academic
year; a traditional private university is $53,217 per academic year.
Due
to the large investment required to attend college, families would
suffer financially if a student were forced to withdraw from school and
not receive a tuition refund. Most families can’t just throw that kind
of money away and not be able to recoup any of their investment.
If
there is one lesson we've learned from the pandemic, it’s that you
should never take anything for granted — especially college. In 2020–21,
many new high school graduates opted to delay their college plans
because of the lockdowns. Students who'd paid tuition before opting out
had to eat those costs unless the college offered them a refund.
Then
there was spring '20, when campuses emptied as students were sent home
because of COVID-19. Colleges were mostly willing to refund some room
and board, but tuition refunds were rare since instruction continued
online. Some families filed lawsuits against the colleges because the
education their student received was not what they were promised.
Since
higher education is such a large investment, it’s important to know
your school’s refund policy and explore other options to recoup your
funds in the event of a withdrawal.
School Refund Policies
Tuition
refund policies vary from college to college. They are usually offered
on a sliding scale and most colleges won’t refund any money after the
fourth week of classes.
For example, the University of Texas,
a public university, offers a 100% refund prior to the first day of
class, 80% during the first five class days, 70% during the second five
class days, and so on with no refund after the fourth week of five class
days. Boston College,
a private institution, will refund 100% before the start of class, 80%
during the first week, 60% during the second week, 40% the third week,
and 20% the fourth week.
After the four weeks, most colleges won’t
even offer a refund in the event of a withdrawal for a medical reason,
although in some cases if a student is granted a Medical Leave of
Absence the tuition they've paid for that term will be held by the
college and can be applied for the term when the student returns.
A study conducted by HigherEdStudy for GradGuard
found that only 6% of schools surveyed provide 100% refunds of tuition
and fees to students who completed a medical withdrawal — down from 23%
in 2015. None of the public colleges surveyed provide 100% refunds, and
40% of schools don’t provide any refund for student fees and academic
fees.
Schools outline their refund policies on their websites,
typically on the Student Accounts/Financial Services or school treasurer
(Bursar's) pages. The information should also be included in the online
university catalog. If you can’t find it online, call the college and
ask.
Tuition Insurance
According to John Fees, co-founder
and CEO of GradGuard, a company that offers tuition insurance, some
people don’t think tuition insurance is a good buy. They compare it to
travel insurance. "That isn’t fair," says Fees, "because cancelling a
$3,000 cruise is not life-changing when leaving school can derail a
student and family’s life and may cost a multiple of what a cruise
does."
Current health trends demonstrate that students’ education
is being disrupted by accidents, injuries, illnesses and more. The
American College Health Associations National College Health Assessment
from 2019 indicates four common student illness and their impacts on
degree completion:
- Flu: 37,000 students delayed their education
- Concussion: 29,000 students delayed their education
- Mononucleosis: 15,000 students delayed their education
- Pneumonia: 11,000 students delayed their education
The study also shows that 75% of public institutions and 67% of private ones have seen an increase in medical withdrawals.
Many
colleges and universities partner with companies like GradGuard to give
students and their families an option beyond the standard refund
policies. Information about tuition insurance (what it covers and how
much it costs) is typically sent at the same time as the tuition
statement and the billing process is usually integrated into the
institution’s billing. If you don’t purchase through the college, you
can also purchase tuition insurance privately through the companies
themselves, although the cost may be slightly higher.
Tuition insurance is reasonably priced based on the amount it will cover, roughly 1% of the college’s tuition cost. GradGuard partners with over 400 colleges and universities. Another provider, A.W.G. Dewar, partners with over 60 colleges and universities, most of which are private.
In a recent article in Inside Higher Ed,
Fees of GradGuard reported, “We’ve seen almost four times growth in the
business in two years. We are seeing record numbers of purchase rates,
and we’re paying a lot of claims. More students and more universities
are adopting the program.”
The insurance covers withdrawals due to injuries, illness such as sickness related to COVID-19, and mental health. Fees recommends that
it’s wise to get coverage in an amount that equals your out-of-pocket
cost for tuition, fees and housing. Coverage is purchased per term, so
it must be renewed each semester. It must also be purchased prior to the
start of classes.
Questions to Ask Before You Buy
Before
purchasing tuition insurance, it’s wise to find out what the refund
policy is at the college your student attends. If the college refunds
your money at any point during the school year, you won’t need the
insurance. But if the college’s policy has strict refund deadlines and
the percentages of return are low, insurance could be a wise purchase.
Here are a few questions you can ask before purchasing the insurance:
- Does the policy cover illness, injury, mental health, substance abuse, COVID-related sickness?
- Does it cover preexisting conditions and what are the guidelines?
- Is the payout the same for all reasons for withdrawals?
- What does the claims process involve?
- Will payment be made to the parent or the college?
In
these uncertain times, it makes sense to know the refund policy at your
student's college or university and explore the benefits of tuition
insurance.